Oct. 25, 2023
I wish there were a “Schoolhouse Rock!” episode on how science becomes a company. It would be great if it could be like a “How a bill becomes a law” tutorial, but for my world. Maybe the animated guy isn’t a rolled-up piece of paper with a snazzy ribbon around him but instead a pill … with her own snazzy ribbon? Hang on. Maybe I’m onto something.
But that’s not the point.
The point is: I am on a personal journey to learn whatever I can learn about this topic of how science becomes a company – and not just so that I could write my own kind of swingy animated poem, “I’m just a pill….” that worms its way into your head.
To orient you on the journey, I recently agreed to spend some time with the very smart people at the University of Virginia’s Licensing & Venture Group. This organization has a team of folks who invest a University-funded venture fund in promising UVA-originated science and engineering. They are just one step in the delicate, fraught and amazing process of pulling science out of an academic setting, supporting its path to turn these ideas from a couple of academic papers into a product, and then helping to determine whether that product is just a product -- which can be licensed to another pharma company -- or whether that product is a company.
So — basically the questions every day for these guys are: is the science a product? And is the product a company?
And if we think the answers to both are “yes” (which is rare, I should add) — how do we support the academic team as they transition across these categories?
This space – the very, very, very early, “It’s a project, not a product,” space – is new to me.
In my past life, I’ve been given an existing product and asked to define the commercial parameters of the future of that product – what it means to the types of clinical trials we should run, which countries are the right countries, etc. I’ve been at tables discussing whether Company A should buy an existing product from Company B. I’ve hashed through whether Company C should sell just a product or the whole company to Company D. I’ve had to decide how to maximize the revenue from an existing product – or an about-to-be-launched product – for Company E. And I’ve made decisions about whether to invest venture capital into start-ups (Companies F, G, H and I) that have decided that they are going to try to be companies.
But in none of those conversations have I been at the table where the question, “Is this even a product?” has been asked. And by “product” I mean that it is ready to be invested in by people outside of a university with the intention of ultimately helping humans.
Suddenly I’m sitting in the midst of a massive, world-class research institution and talking to scientists and engineers about their ideas and inventions and helping them decide (and deciding myself) whether or not this is ever going to be a product and whether that product should leave UVA as its own venture or not.
In my first month as an “Entrepreneur in Residence,” I’ve been exposed to ideas related to green construction materials, electric vehicle components, technologies for joints and pelvic surgery, software for the operating room, platforms for people with infectious disease, and a new way to treat breast cancer.
And that’s just the smallest possible slice of what is sitting nestled here in the Blue Ridge Mountains, inside of a very cool old Coca-Cola bottling warehouse in downtown Charlottesville, waiting to be discovered and shared with the world.
Not surprisingly, I’m spending more time on medical projects. The first question, for me, has been whether or not there is a “there there” scientifically and, if so, is there a market for it? Even more importantly, will anyone with funding agree with us, and, if so, who are those people and what will they need to see from these tiny teams here at UVA to agree to chip in on the very long, very expensive, and very risky financing journey?
I spoke with one of my all-time favorite venture guys and asked him, “If you were standing right next to me while I walk around all of this cool science, what would you be asking me to do so that you can get great stuff when the time comes?.” He very cleanly and clearly (which is why he is one of my favorites) outlined for me the validation that his firm would have to see in order to put capital against a truly brand new biotechnology. They want to see analogues in the specific scientific area, similar mechanisms that have worked (or haven’t – and an understanding of the success or failure), previous attempts that have at least made it to the clinic, validated targets, druggable chemistry, etc. Mature biology. Mature chemistry. They need reasons to believe outside of what the scientist says (or how convincing the scientist is).
So we know what needs to be done. But, as with all things new – who is going to do these things (like literally do the actual work) and who is going to pay for it?
First, let’s talk about talent. Most of these scientists are professors who have other professional fish to fry – and they might be doing the science for the love of the science (and the hope for tenure and publication) and not so much because they can’t wait to think about federal grants and whether or not to set up a corporate structure. No matter how psyched I am for their stuff, they often have so many other competing priorities and a long list of professional obligations (or, at least, what their department needs from them), so they may say, “Unless you can show me a graduate student who can do all of validation work that the FDA or Lisa’s venture guy needs, I can’t dump these three papers I have to write or these two classes I have to teach in order to get this done.” I get that.
Even if you can find the grad students or interns or friendly professionals in town who have a couple of hours to spare – how do you pay for it? All of this work requires non-dilutive funding from somewhere before we know much about anything. Before the venture guys can see the validation needed to invest, these tiny academic teams need to assess the feasibility – and attractiveness – of federal grant funding, local UVA grant funding, and funding from the state (or Commonwealth, forgive me) of Virginia to support their work, and there are pros and cons to every type of dollar that a team might seek to get to the next inflection point. This is also a new frame for me. I’ve spent the last several years having discussions about the true costs and benefits of private (venture) capital, public (Wall St.) capital and non-profit capital. Here, we’re thinking about government capital. It’s a whole different ball game. (And maybe the topic of a future piece.)
To me, the path that winds its way through these labor and funding challenges seems almost impossible, and the stakes seem so high when you take into account the fact that the science is so early. This dance of financing and science and talent has to come together to take a whole lot of risk, and yet is more likely to fail than succeed. A friend recently said to me, “Why would a venture shop put any capital against an early academic play when all of the valuations in much later stage, de-risked companies are just as cheap right now?” (She’s not wrong. Thanks, biotech winter.) So that begs the question, “How can we keep these precious ideas afloat at UVA until the sun once again shines on Biotech Land? (situated next door to Barbie Land?)” We’re asking ourselves this every day.
The stakes here seem high because I worry that we might miss something that matters. What if we can’t bring together that perfect combination of money and talent and creativity for something that could really benefit sick people – or the world – because I’m in a bad mood one day and just can’t be bothered to ask the right question that would deliver a hopeful belief in the future?
So I’m here in the Blue Ridge mountains, trying to help make some high stakes calls about whether this science – versus that science, or this market, or this founder – is the one that will make it all the way when all we’ve got is a paper and a graduate student. And despite many years of experience in relevant areas, some days I feel like I’m just a forest-dwelling English major who happens to be hanging around at 722 Preston Avenue, between the organic juicery and the high-end bicycle shop.
Recently, my friend Kevin Judice sold his company, Dice Therapeutics, for $2.4 billion, and I have confidence that Eli Lilly is going to drive that product – and platform – to a massive scale. Yet at some point, long ago, that technology platform was the twinkle in the eye (or brain) of a scientist somewhere. Someone believed, and somehow, money came.
So how do we repeat it? One step at a time. I think about how I built Rhia Ventures as a founder myself with a small group of smart, passionate colleagues. We had the long view in mind, but we embraced the work of building one day at a time. Are we aligned on our future view? In that case, what are the no-regrets moves we need to make in the next three months? And in that case, what has to happen today? And if we do this today, what should we NOT do today in order to slow our burn rate and keep ourselves focused? Which dollars do we take, and what are the consequences of those dollars?
The game remains the same, whether it is in a small office on Market Street in San Francisco or a very cool old Coca-Cola bottling warehouse in downtown Charlottesville. It’s an adventure. I’m already enjoying the ride.